Thursday, October 23

An Italian Bailout

A lot of people have been asking me how America’s financial meltdown is affecting us over here in the Bel Paese. And, the true answer is, not much, thank you. And while they’re predicting a sure recession and all that goes with it, the sound you hear of the gears of productivity, growth and fiscal levity grinding to a slow halt have been resounding long before America’s blood bath.

In fact, Italy, has spawned an entire generation of mammonis whose only skill is how to live (well) off of mamma & papà (mamma for the cooking, cleaning and clothes, papà for the dough, expenses and fabulous cars and trips). Rather than be entirely productive, Italy is having a problem playing catch up with the rest of Europe, if not the rest of the world. The 1970s boom allowed parents to invest in properties, things, and all sorts of trappings, leading to the coddling of offspring to the point of inertia. From time to time, reporters enjoy getting the boy/man-on-the-street interviews, asking them how they’re coping…astoundingly, most proudly declare, they live off of daddy. So, with the low productivity, high competition, and out of control inflation (post-euro), the economy was already well in free fall long before Wall Street was.

Then, there’s the housing/mortgage crisis. Again, while cheap mortgages did take Italy by a storm, here it didn’t blow so hard and so fast. Italy still has a long tradition of home purchases for the kiddies; rarely do parents take out those mortgages. Defaulting on your mortgage? Italians don’t need the nanny state to bail them out, they get it from their own mamma state (tax and interest free, no less). I know dozens of mammas who currently fork over (from their retirement savings) the monthly mortgages, cars, and vacations of their adult kids. Call it an umbilical cord of credit.

The problem is, and I’ve been asking myself this question for years, how are these kids – with low savings, nonexistent means, under-employment, and high costs going to provide for their kids once the Boomer Generation (and I mean those who lived through the 1970s boom) are gone, along with their savings?

You want a bail out? The Italians are currently using buckets with holes in them in order to keep this ship afloat.

7 comments:

Guido Costantini said...

"how are these kids – with low savings, nonexistant means, under-employment, and high costs- going to provide for their kids"

Why do you think we have one of the lowest natality rates in the world?

In fact, your article is a bit ungenerous, if I may. I know a load of "mammonis" who would happily live on their own, but, especially in the big cities, the average entry salary (and quite a bit after that) doesn't actually allow you to have a roof over your head AND eating during the same month. Yeah, a lot of mammonis per their own choice, but probably just as many due sheer necessity.

Snow White said...

Actually I believe there are many points untouched here.

First, the crisis is hitting Italy as well as the rest of Europe and how! Since banks do not trust one another they are not lending between them as they have done previously. THis means they are calling in the notes and or reducing the loan amount given and asking for half of it back all in a big 3 days notice.
This is going to bring a huge swath of layoffs and fornitori will not get paid either. It is a dog bitting its tail syndrome; the more people are laid off the more econimic crisis and it is not about mommonis. Already sales at the pump have fallen 15%...did you all read that? 15% is huge!!!!

If the banks are calling in liquidity, then what? They are not going any kind and I mean any kind of loans or fidos and that means no more mortgages for those trying to buy a home and no more guarantees for those trying to rent an apartment because owners do not trust anyone so they ask for these damn fidos that cost a maga cash up front. This translates down to no more real estate transactions...

I do not see how mommonis figure in all of this. Italians are like a people I have never seen before because when it is time to roll op their sleeves, they do. Look at post WWII, Italy rebuilt with their sweat and blood and fought to maintain their historical structures.
Mommonis are working, there is no question the problem is...the prices of places to live for one and the prices to maintain a reasonable life style thus, you have many families living in the same walls to help make ends meet. To buy a hole in Milan, cio'è a decent hole, one needs a minimum of half million Euros. To rent in the city...you need three stipends.

I do understand the mommoni syndrome since I was married to one and yes it is quite sad but parents are not as dumb as they were and they are realizing they are not doing their boys a favor by giving and providing for many things above and beyond the basics.

This crisis is going to force all of us here to reorganize and this is not something we will be able to fix quickly because Italy's political history package is a tad overweight. Silivo is doing hole plugging and trying to fix laws that should have been in effect a long time ago. At least, we can say that Italy has not succumbed to the syndrome of selling air as the US and many other banks have done. Italy is based on real product and thus lower risks.

I hope the banks begin to do what they are supposed to be doing and that is banking because right now, things are risking to come to a fast halt.

Ms. Violetta said...

You know what? All of my Italian friends are working their butts off and NOT living off Mom and Dad. Most if not all, work two jobs and are just getting by. The low wages and high cost of living makes it impossible to rent or even buy a home. In fact, a lot of them are helping out Mom and Dad and to me that is what family is all about. There are two sides to every story.

Francesca Maggi said...

Wow. Thanks for your great insights. Of course, my piece was in the continued spirit of hyperbole...! I, too, know many working couples with families (although all of them have houses in the city and the countryside paid for by mom&dad)...

As for the reasons the mammonis stay at home...Scusami Guido, but, that's what roommates are for. I had 45 in my lifetime.

Guido Costantini said...

I happen to disagree. I'm all for living on my own (even better, with my gf), but if I have to share my living space, I prefer to do it with my own family, whom I know and I care for, rather than with the odd stranger which in many cases will be a source of nuisance. That, and and the undeniable economical and other advantages. Compromise for compromise, family makes more affective and economical sense.

If that is being mammoni, preferring your family than a stranger when the two things are both available... well, ok, then I suppose that we are. I thought mammoni was wanting to stay in the family when you could actually live a fully independent life.

Anonymous said...

While I think it's a crime to take advantage of all the years of hard work and savings that their parents have, I have to agree with Guido, Snow White and Ms. Violetta.

My fidanzato is the perfect example. He is an assistant professor for a university in a big city in Italy and up until last year, also worked for the city museum. He lost his job at the museum because they cut off the funding. As far as his job at the university, he does all the grunt work for the professor he works for. I don't know if you are familiar with the university system in Italy, but for lack of a better term, it sucks. First there's nepotism, so because he's just a poor schmuck who doesn't know anybody at the top, his career will never advance, and the pay...Pitiful. I made more money working as a counter sales girl when I was younger.
He had his own flat, but had to give it up and move back in with his parents. He's a victim of circumstance. He loves his family to death, but would much rather be living on his own. He doesn't ask his parents for money and he is a hard worker. When he was here with me this past summer, I always came home to a clean place and a great homemade meal. I don't think a mammone would do that.
I'm sure there are a lot of other people who are in his situation. We have a friend here who used to work for the university system in Italy too and she was lucky enough to find a job here in the U.S.,now she is trying to help him and it is looking good and he may be here by January.
In my culture, it is normal for adults to stay living at home with their parents even after they have a family, either because of necessity or convenience. Family is special to us. I have lived with roommates myself and would never do it again, never.
I have seen the flip side of that, however. I went to a country in Asia and stayed for a month with host family. This family's children were well educated. Lawyers, engineers, doctors, etc (big family) only two of them left the nest, the others stayed and totally mooched off their parents. One of them had a gambling addiction which his parents had to pay off regularly because not even his salary could cover it.
If you ask me, when you enable your kids to do such things, then I have no sympathy. So the parents are primarily to blame. Like I said though, it should be a crime to take advantage of your parents. Both sides are guilty.

Anonymous said...

Guys, I hate to break it to you, but this blog is NOT known to be a blog that analyzes the economic impact of the global financial crisis, nor does it pretend to be. It is supposed to be a light-hearted poking fun of living in Italy. If you are looking for the complete story of the financial crisis, may I suggest the blog "Planet Money." Otherwise, relax and don't over-analyze the jokes!

p.s. Yes, there IS something wrong with you if you prefer to live with Mom and Dad after the age of 20 or so (according to the norms of most of the OECD countries :-)